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Diamond Foods Inc (NAS:DMND)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Diamond Foods Inc has an F-score of 3. It is a bad or low score, which usually implies poor business operation.

DMND' s 10-Year Piotroski F-Score Range
Min: 1   Max: 8
Current: 3

1
8

During the past 13 years, the highest Piotroski F-Score of Diamond Foods Inc was 8. The lowest was 1. And the median was 5.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Net Income was -105.633 + -1.856 + 7.694 + 11.177 = $-88.6 Mil.
Cash Flow from Operations was -163.682 + -0.341 + 14.584 + 54.419 = $-95.0 Mil.
Revenue was 190.892 + 219.07 + 246.621 + 229.667 = $886.3 Mil.
Gross Profit was 45.096 + 49.289 + 59.39 + 61.158 = $214.9 Mil.
Average Total Assets from the begining of this year (Jan14)
to the end of this year (Jan15) was
(1228.757 + 1223.285 + 1192.834 + 1338.411 + 1271.992) / 5 = $1251.0558 Mil.
Total Assets at the begining of this year (Jan14) was $1,228.8 Mil.
Long-Term Debt was $635.3 Mil.
Total Current Assets was $352.8 Mil.
Total Current Liabilities was $220.8 Mil.
Net Income was -15.582 + -143.741 + -42.153 + -15.06 = $-216.5 Mil.

Revenue was 184.905 + 199.801 + 234.668 + 220.577 = $840.0 Mil.
Gross Profit was 43.35 + 53.058 + 57.933 + 55.928 = $210.3 Mil.
Average Total Assets from the begining of last year (Jan13)
to the end of last year (Jan14) was
(1274.975 + 1240.9 + 1172.315 + 1307.218 + 1228.757) / 5 = $1244.833 Mil.
Total Assets at the begining of last year (Jan13) was $1,275.0 Mil.
Long-Term Debt was $549.4 Mil.
Total Current Assets was $280.1 Mil.
Total Current Liabilities was $418.9 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Diamond Foods Inc's current net income (TTM) was -88.6. ==> Negative ==> Score 0.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Diamond Foods Inc's current cash flow from operations (TTM) was -95.0. ==> Negative ==> Score 0.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Jan14)
=-88.618/1228.757
=-0.07212004

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=-216.536/1274.975
=-0.16983549

Diamond Foods Inc's return on assets of this year was -0.07212004. Diamond Foods Inc's return on assets of last year was -0.16983549. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Diamond Foods Inc's current net income (TTM) was -88.6. Diamond Foods Inc's current cash flow from operations (TTM) was -95.0. ==> -95.0 <= -88.6 ==> CFROA <= ROA ==> Score 0.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jan15)=Long-Term Debt/Average Total Assets from Jan14 to Jan15
=635.252/1251.0558
=0.50777271

Gearing (Last Year: Jan14)=Long-Term Debt/Average Total Assets from Jan13 to Jan14
=549.39/1244.833
=0.44133631

Diamond Foods Inc's gearing of this year was 0.50777271. Diamond Foods Inc's gearing of last year was 0.44133631. ==> Last year is lower than this year ==> Score 0.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Jan15)=Total Current Assets/Total Current Liabilities
=352.8/220.815
=1.59771755

Current Ratio (Last Year: Jan14)=Total Current Assets/Total Current Liabilities
=280.055/418.885
=0.66857252

Diamond Foods Inc's current ratio of this year was 1.59771755. Diamond Foods Inc's current ratio of last year was 0.66857252. ==> This year's current ratio is higher. ==> Score 1.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Diamond Foods Inc's number of shares in issue this year was 31.5. Diamond Foods Inc's number of shares in issue last year was 22.1. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=214.933/886.25
=0.24251961

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=210.269/839.951
=0.25033484

Diamond Foods Inc's gross margin of this year was 0.24251961. Diamond Foods Inc's gross margin of last year was 0.25033484. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Jan14)
=886.25/1228.757
=0.72125734

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jan13)
=839.951/1274.975
=0.65879802

Diamond Foods Inc's asset turnover of this year was 0.72125734. Diamond Foods Inc's asset turnover of last year was 0.65879802. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=0+0+1+0+0+1+0+0+1
=3

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Diamond Foods Inc has an F-score of 3. It is a bad or low score, which usually implies poor business operation.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Diamond Foods Inc Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
Question 1 1111111000
Question 2 1111101010
Question 3 0011100000
Question 4 0101101111
Question 5 0101001000
Question 6 1111001001
Question 7 0000000100
Question 8 0011101011
Question 9 0011000001
F-score 3568516234

Diamond Foods Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
Question 1 0000000000
Question 2 0111110000
Question 3 0010000011
Question 4 1111111110
Question 5 0000000000
Question 6 0010001111
Question 7 1000010000
Question 8 0111111100
Question 9 0000011111
F-score 2353354443
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